Feronia Inc. incorporated a wholly-owned subsidiary in the Democratic Republic of Congo ("DRC") to pursue the production of agricultural lime and other fertilizers.
The company anticipates becoming a major consumer of agricultural lime, primarily in the arable farming division. Feronia is also a rapidly growing consumer of various fertilizers in both its arable and oil palm operations. Local fertilizer prices are currently in excess of $1,000 per tonne, a significant premium to world prices.
Large-scale deposits of both limestone and various minerals required for the production of fertilizers are present in the DRC. Feronia plans to lease and develop some of these deposits through its wholly-owned subsidiary and in the process cover local requirements and ultimately export into international markets.
Feronia has identified suitable concessions for limestone and is in the process of securing the required leases. Additional agri-mineral concessions are being identified and reviewed with local geologists. Following further technical investigations, the Company anticipates that the appropriate leases will be obtained.
The subsidiary company is currently managed by Feronia's management team. These opportunities are capital intensive and require specialized expertise. Accordingly, Feronia plans to install a management team experienced in the development of fertilizer assets and evaluate various options to fund the growth of the subsidiary including seeking a strategic investor in the unit, acquiring an independent public listing, or funding the growth through cash-flows of the parent. A consultant has been engaged to complete a feasibility study and develop a business plan for the agricultural lime business, completion of which is anticipated by the end of Q2, 2011.
The company expects that the development of large scale agriculture in the DRC and other countries in the region will result in a large increase in the demand for agricultural lime and fertilizers. Company CEO James Siggs remarked "There is an exciting opportunity for Feronia to leverage its 100-year operating history in the DRC to vertically integrate into the production of agri-minerals and create significant shareholder value in the process."